A consortium of South Korea’s steel maker Posco and battery maker Samsung SDI Co. has won a project in Chile to produce cathode, a key material for lithium-ion batteries, which is expected to help the two firms ensure a stable supply of electric vehicle batteries whose demand is on the rapid rise by taking advantage of Chile’s ample lithium deposits.

Posco and Samsung SDI announced on Sunday that they have been chosen to build a cathode manufacturing plant in Chile by the Chilean development agency CROFO last Friday (local time).

Shares of Posco closed Monday up 2.32 percent at 353,000 won and those of Samsung SDI up 3.05 percent at 202,500 won.

The tender launched by CORFO in May last year drew 12 companies from seven countries. Of the seven firms shortlisted after initial screening in August last year, the Posco-Samsung SDI consortium, Chile’s Molymet and China’s Sichuan Fulin Industrial Group were finally selected to make investments in the lithium industry in Chile, home to half of the world’s lithium reserves.

The two firms plan to invest 57.5 billion won ($54 million) to set up a joint venture and a plant to produce cathode materials in the northern city of Mejillones. They aim to start operation of the facility that will produce 3,200 tons of high-performance cathodes per annum from the latter half of 2021.